The Department of Health's deprivation payment system for general practitioners (GPs) and its use of Professor Jarman's Underprivileged Area (UPA) index to define deprived areas are examined critically. It is shown that the statistical problem of differential skewness of the component variables plagues the construction of UPA scores and alternative indexes. In particular, this skewness distorts GPs' explicit weightings of the constituent variables of the UPA index. It is argued that the Department's current, stepped payment system requires a degree of precision and accuracy in measuring deprivation which is at odds with the quality both of the data and of the UPA index used. Furthermore, if the UPA index was replaced by the Townsend index, a substantial geographic redistribution of payments would occur, particularly benefiting Merseyside, the North East, and Humberside. It is recommended that the Department of Health adopt a tapered payment system consistent with the continuous gradation of area deprivation scores. An illustration of a scheme involving no additional public expenditure is given. Such a scheme may be more politically acceptable to the government if the payments to GPs are more accurately labelled 'workload payments'.
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